Hi all,
Been in Reykjavik two times and you should not worry about this because it is a small city, despite being the capital. Public transport is a little expensive though, so I would try to stay close to the center. Anyway, I suggest you to rethink the car thing... if not, it will be difficult for you to see a lot of amazing places. About hotel search engines, besides the famous ones, I have good opinion about hotelnights and kayak, give them a look
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